Back in June I wrote about the Securities and Exchange Commission’s must-win case against Dallas businessman Sam Wyly. Well, win the SEC did, and now a federal judge has slapped penalties of more than $300 million on Wyly and the estate of his late brother, Charles — sanctions that even the judge herself characterized as “staggering.”
After he was warned that an elaborate scheme of offshore trusts posed an “aggressive and risky” tax strategy, Dallas businessman Sam Wyly dismissed the concerns by saying “if the IRS ever challenged his position, he would litigate for years and settle for pennies on the dollar,” according to documents the government filed against him in court. It hasn’t quite worked out as he planned.
It wasn’t the Internal Revenue Service, but the Securities and Exchange Commission that challenged him – and won. Earlier this year, jurors found him liable for using the trusts to hide more than $550 million in profits from secret stock sales. Now, the judge overseeing the case has slapped Wyly and the estate of his late brother, Charles, with a judgment that requires them to pay a whopping $300 million in sanctions and interest.
The judgment is one of the biggest ever ordered against a single individual, and comprises 10 percent of all the penalties and disgorgements that the SEC ordered for all of last year. Even U.S. District Judge Shira Scheindlin called her decision “staggering.”